<PAGE> 1
As filed with the Securities and Exchange Commission on February 22, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------
CARDINAL HEALTH, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-0958666
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5555 Glendon Court, Dublin, Ohio 43016
(Address of Principal Executive Offices) (Zip Code)
----------
CARDINAL HEALTH, INC. EQUITY INCENTIVE PLAN
(Full title of the plan)
----------
Steven Alan Bennett
Executive Vice President, General Counsel and Secretary
Cardinal Health, Inc.
5555 Glendon Court
Dublin, Ohio 43016
(Name and address of agent for service)
(614) 717-5000
(Telephone number, including area code, of agent for service)
----------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
=====================================================================================================
Proposed maximum Proposed maximum
Title of securities to Amount to be offering price aggregate offering Amount of
registered registered(1) per share(2) price(2) registration fee(2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares
without par value 3,743,270 $76.75 $287,295,973 $79,870
=====================================================================================================
</TABLE>
(1) Also includes an indeterminable number of additional shares that may
become issuable pursuant to the anti-dilution provisions of the Plans.
(2) The registration fee has been calculated pursuant to Rule 457(c) and
(h) based on the average of the high and low sale prices on February
17, 1999, of the Registrant's Common Shares as reported on the New York
Stock Exchange.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (j) below are incorporated by
reference in the registration statement. All documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), subsequent to the date of the filing
of this registration statement and prior to the filing of a post-effective
amendment that indicates that all securities registered hereunder have been
sold, or that de-registers all securities then remaining unsold, shall be deemed
to be incorporated by reference in the registration statement and to be a part
hereof from the date of the filing of such documents.
(a) The Annual Report on Form 10-K of the Company for the fiscal
year ended June 30, 1998 filed with the Securities and
Exchange Commission (the "Commission") on September 1, 1998
(excluding Items 7 and 8) ("Form 10-K");
(b) The information contained in the Company's Proxy Statement
dated September 28, 1998 for its Annual Meeting of
Shareholders held on November 23, 1998 that has been
incorporated by reference in its Form 10-K;
(c) The Company's Current Report on Form 8-K/A filed with the
Commission on September 28, 1998, amending the Company's
Current Report on Form 8-K filed with the Commission on August
10, 1998;
(d) The Company's Current Report on a Form 8-K filed with the
Commission on October 13, 1998;
(e) The Company's Current Report on Form 8-K filed with the
Commission on November 24, 1998;
(f) The Company's current report on Form 8-K filed with the
Commission on January 21, 1999;
(g) The Company's current report on Form 8-K filed with the
Commission on February 4, 1999;
(h) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998, filed with the Commission on
November 13, 1998;
(i) The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1998, filed with the Commission on February
11, 1999; and
(j) The description of the Company's Common Shares contained in
the Company's Registration Statement on Form 8-A dated August
19, 1994, pursuant to Section 12 of the Exchange Act.
<PAGE> 3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Shares offered hereby has been passed upon
for the Company by Paul S. Williams, Assistant General Counsel of the Company.
Mr. Williams holds vested and unvested options to purchase Common Shares of the
Company, and unvested restricted Common Shares of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
Article 6 of the Company's Restated Code of Regulations ("Code of
Regulations"), as amended and restated, contains certain indemnification
provisions adopted pursuant to authority contained in Section 1701.13(E) of the
Ohio Revised Code. The Company's Code of Regulations provides for the
indemnification of its officers, directors, employees, and agents against all
expenses with respect to any judgments, fines, and amounts paid in settlement,
or with respect to any threatened, pending, or completed action, suit, or
proceeding to which they were or are parties or are threatened to be made
parties by reason of acting in such capacities, provided that it is determined,
either by a majority vote of a quorum of disinterested directors of the Company
or the shareholders of the Company or otherwise as provided in Section
1701.13(E) of the Ohio Revised Code, that (a) they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interest of
the Company; (b) in any action, suit, or proceeding by or in the right of the
Company, they were not, and have not been adjudicated to have been, negligent or
guilty of misconduct in the performance of their duties to the Company; and (c)
with respect to any criminal action or proceeding, that they had no reasonable
cause to believe that their conduct was unlawful. Section 1701.13(E) provides
that to the extent a director, officer, employee, or agent has been successful
on the merits or otherwise in defense of any such action, suit, or proceeding,
such individual shall be indemnified against expenses reasonably incurred in
connection therewith. At present there are no material claims, actions, suits,
or proceedings pending where indemnification would be required under these
provisions, and the Company does not know of any such threatened claims,
actions, suits, or proceedings which may result in a request for such
indemnification.
The Company has entered into indemnification contracts with each of its
directors and executive officers. These contracts generally: (i) confirm the
existing indemnity provided to them under the Company's Code of Regulations and
assure that this indemnity will continue to be provided; (ii) provide that if
the Company does not maintain directors' and officers' liability insurance, the
Company will, in effect, become a self-insurer of the coverage; and (iii)
provide that, in addition, the directors and officers shall be indemnified to
the fullest extent permitted by law against all expenses (including legal fees),
judgments, fines, and settlement amounts incurred by them in any action or
proceeding on account of their service as a director, officer, employee, or
agent of the Company, or at the request of the Company as a director, officer,
employee, trustee, fiduciary manager, member or agent of another corporation,
partnership, trust, limited liability company, employee benefit plan or other
enterprise and; (iv) provide for the mandatory advancement of expenses to the
executive officer or director in connection with the defense of any proceedings,
provided that the executive officer or director agrees to reimburse the Company
for that advancement if it is ultimately determined that the executive officer
or director is not entitled to the indemnification for that proceeding under the
agreement. Coverage under the contracts is excluded: (A) on account of conduct
which is finally adjudged to be knowingly fraudulent, deliberately dishonest, or
willful misconduct; or (B) if a final court of adjudication shall determine that
such indemnification is not lawful; or (C) in respect of any suit in which
judgment is rendered for violations of Section 16(b) of the Securities and
Exchange Act of 1934, as amended, or provisions of any federal, state, or local
statutory law; or (D) on account of any remuneration paid which is finally
adjudged to have been in violation of law; or (E) on account of conduct
occurring prior to the time the executive officer or director became an officer,
director,
<PAGE> 4
employee or agent of the Company or its subsidiaries (but in no event earlier
than the time such entity became a subsidiary of Cardinal); or (F) with respect
to proceedings initiated or brought voluntarily by the executive officer or
director and not by way of defense, except for proceedings brought to enforce
rights under the indemnification contract.
The Company maintains a directors' and officers' insurance policy which
insures the officers and directors of the Company from any claim arising out of
an alleged wrongful act by such persons in their respective capacities as
officers and directors of the Company.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
4(a) Specimen Certificate for the Registrant's Class A Common Shares (1)
4(b) Cardinal Health, Inc. Equity Incentive Plan
5 Opinion of Paul S. Williams as to legality of the Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Ernst & Young LLP
23(c) Consent of PricewaterhouseCoopers LLP
23(d) Consent of Arthur Andersen LLP
23(e) Consent of Paul Williams (included in Opinion filed as Exhibit 5 hereto)
24 Power of Attorney (included in signature page to Registration Statement)
</TABLE>
(1) Included as an exhibit to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997 and incorporated herein by
reference.
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended (the "Securities Act"); (ii) to reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
clauses is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement;
<PAGE> 5
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 6 above or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dublin, State of Ohio, on the 19th day of
February, 1999.
CARDINAL HEALTH, INC.
By: /s/ Robert D. Walter
---------------------------------
Robert D. Walter, Chairman and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert D. Walter, Steven Alan Bennett,
and Paul S. Williams, and each of them, severally, as his/her attorney-in-fact
and agent, with full power of substitution and resubstitution, for him/her and
in his/her name, place, and stead, in any and all capacities, to sign any and
all post-effective amendments to this Registration Statement, and to file the
same with all exhibits hereto, and other documents with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he/she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-8 has been signed by the following persons in
the capacities indicated on the 19th day of February, 1999.
Signature Title
- --------- -----
/s/ Robert D. Walter
- -------------------------- Chairman and Chief Executive
Robert D. Walter Officer (principal executive officer)
and Director
/s/ Richard J. Miller
- -------------------------- Vice President, Acting Chief
Richard J. Miller Financial Officer and Controller
(principal financial officer
and principal accounting officer)
<PAGE> 7
/s/ Silas S. Cathcart
- -------------------------- Director
Silas S. Cathcart
/s/ Aleksander Erdeljan
- -------------------------- Director
Aleksander Erdeljan
/s/ John F. Finn
- -------------------------- Director
John F. Finn
/s/ Robert L. Gerbig
- -------------------------- Director
Robert L. Gerbig
/s/ John F. Havens
- -------------------------- Director
John F. Havens
/s/ Regina E. Herzlinger
- -------------------------- Director
Regina E. Herzlinger
/s/ John C. Kane
- -------------------------- Director
John C. Kane
/s/ Lester B. Knight
- -------------------------- Director
Lester B. Knight
/s/ J. Michael Losh
- -------------------------- Director
J. Michael Losh
/s/ George R. Manser
- -------------------------- Director
George R. Manser
/s/ John B. McCoy
- -------------------------- Director
John B. McCoy
/s/ Michael D. O'Halleran
- -------------------------- Director
Michael D. O'Halleran
<PAGE> 8
/s/ Jerry E. Robertson
- -------------------------- Director
Jerry E. Robertson
/s/ L. Jack Van Fossen
- -------------------------- Director
L. Jack Van Fossen
/s/ Melburn G. Whitmire
- -------------------------- Director
Melburn G. Whitmire
<PAGE> 9
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
4(a) Specimen Certificate for the Registrant's Class A Common Shares (1)
4(b) Cardinal Health, Inc. Equity Incentive Plan
5 Opinion of Paul S. Williams as to legality of the
Common Shares being registered
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Ernst & Young LLP
23(c) Consent of PricewaterhouseCoopers LLP
23(d) Consent of Arthur Andersen LLP
23(e) Consent of Paul Williams (included in Opinion filed as
Exhibit 5 hereto)
24 Power of Attorney (included in Signature Page to
Registration Statement)
(1) Included as an exhibit to the Registrant's Annual Report on Form
10-K for the fiscal year ended June 30, 1997 and incorporated by
reference.
<PAGE> 1
EXHIBIT 4(b)
CARDINAL HEALTH, INC.
EQUITY INCENTIVE PLAN
SECTION 1 | PURPOSE
The purpose of the Cardinal Health, Inc. Equity Incentive Plan (the "Plan") is
to assist Cardinal Health, Inc. ("CAH") and its subsidiaries (CAH and its
subsidiaries, collectively, the "Company") in attracting and retaining capable
employees and directors. The Plan provides for long and short term incentives to
employees by encouraging and enabling them to participate in the Company's
future prosperity and growth. The Plan provides for equity ownership
opportunities and appropriate incentives to better match the interests of
employees and directors with those of shareholders.
These objectives will be promoted through the granting to employees of
equity-based awards (the "awards") including (i) Incentive Stock Options
("ISOs"), which are intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"); (ii) options which are not
intended to so qualify ("NQSOs") (ISOs and NQSOs are referred to together
hereinafter as "Stock Options"); (iii) Restricted Shares; (iv) Performance
Shares; (v) Performance Share Units and (vi) Incentive Compensation Restricted
Shares. Members of CAH's Board of Directors (the "Board") who do not serve as
employees of the Company ("Outside Directors") shall receive NQSOs from the Plan
only as provided herein.
SECTION 2 | ADMINISTRATION
The Plan shall be administered by the Compensation and Personnel Committee (the
"Committee") of the Board which shall have the power and authority to grant to
eligible employees Stock Options, Restricted Shares, Performance Shares,
Performance Share Units and Incentive Compensation Restricted Shares. In
particular, the Committee shall have the authority to: (i) select employees of
the Company as recipients of awards; (ii) determine the number and type of
awards to be granted; (iii) determine the terms and conditions, not inconsistent
with the terms hereof, of any award; (iv) adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; (v) interpret the terms and provisions of the
Plan and any award granted and any agreements relating thereto; and (vi) take
any other actions the Committee considers appropriate in connection with, and
otherwise supervise the administration of, the Plan. All decisions made by the
Committee pursuant to the provisions hereof shall be made in the Committee's
sole discretion and shall be final and binding on all persons. Members of the
Committee shall be "disinterested persons" within the meaning of Rule 16b-3
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
<PAGE> 2
The Committee may designate persons other than its members to carry out its
responsibilities under such conditions and limitations as it may set, other than
its authority with regard to awards granted to persons subject to Section 16 of
the Exchange Act ("Reporting Persons").
SECTION 3 | ELIGIBILITY
Employees of the Company and its subsidiaries who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or subsidiary, in each case as determined by the Committee, are
eligible to be granted awards. The participants under the Plan who are not
Outside Directors shall be selected from time to time by the Committee, in its
sole discretion, from among those eligible. In addition, Outside Directors are
eligible to receive NQSOs as set forth in Section 9 ("Outside Director
Options"), and may not receive any other awards under this Plan. Members of the
Committee are eligible to receive Outside Director Options.
SECTION 4 | SHARES SUBJECT TO PLAN
The total number of the Company's common shares, without par value ("Shares"),
reserved and available for distribution pursuant to awards (including without
limitation Outside Director Options) hereunder ("Available Shares") shall be an
amount equal to the sum of (a) 1.5% of the total outstanding Shares as of the
last day of the Company's immediately preceding fiscal year, plus (b) the number
of Shares available for grant under the Plan as of November 23, 1998, plus (c)
any Shares related to awards that, in whole or in part, expire or are
unexercised, forfeited, terminated, surrendered, canceled, settled in such a
manner that all or some of the Shares covered by an award are not issued to a
participant, or returned to the Company in payment of the exercise price or tax
withholding obligations in connection with outstanding awards, plus (d) any
unused portion of the Shares available under section (a) above for the
immediately preceding two fiscal years (but not prior to the Company's fiscal
year ending June 30, 1999) as a result of not being made subject to a grant or
award in such preceding two fiscal years. Notwithstanding the foregoing, for the
Company's fiscal year ending June 30, 1999, the number of total outstanding
Shares in section (a), above, shall be calculated as of November 23, 1998,
rather than June 30, 1998 (the last day of the immediately preceding fiscal
year). No more than fifty(50)% of the Available Shares shall be granted in the
form of Restricted Shares, Incentive Compensation Restricted Shares, Performance
Shares and Performance Share Units. The Available Shares may consist, in whole
or in part, of authorized but unissued Shares, treasury Shares, or previously
issued Shares re-acquired by the Company, including Shares purchased on the open
market. The maximum number of Shares with respect to which Stock Options,
Performance Shares and Performance Share Units may be granted to any single
participant during any single fiscal year of the Company shall be 375,000
Shares. The number of Shares with respect to which ISOs may be granted shall not
exceed 3,000,000. Any of the Shares delivered upon the assumption of or in
substitution for outstanding grants made by a company or division acquired by
the
2
<PAGE> 3
Company shall not decrease the number of Shares available for grant under the
Plan, except to the extent otherwise provided by applicable law or regulation.
In the event of any stock dividend, stock split, share combination, corporate
separation or division (including, but not limited to, split-up, spin-off,
split-off or distribution to CAH shareholders other than a normal cash
dividend), or partial or complete liquidation, or any other corporate
transaction or event having any effect similar to any of the foregoing, then the
aggregate number of Shares reserved for issuance under the Plan, the limitation
on the number of Shares available under the Plan for issuance of Restricted
Shares, Incentive Compensation Restricted Shares, Performance Shares and
Performance Share Units, the limitation on the number of Shares subject to ISOs,
the limitations on the number of Shares subject to Stock Options or Performance
Shares or Performance Share Units granted to any single participant, the number
and exercise price of Shares subject to outstanding Stock Options, the purchase
price for Restricted Shares, the financial Performance Goals, if any, of the
Shares the subject of a Performance Share or Performance Share Unit award, the
number of Shares subject to a Performance Share or Performance Share Unit award
or granted by a Restricted Share or Incentive Compensation Restricted Share
award, and any other characteristics or terms of the awards or Plan limitations
as the Committee shall deem necessary or appropriate to reflect equitably the
effects of such changes, shall be appropriately substituted for new shares or
adjusted, as determined by the Committee in its discretion. Any such adjustments
made to NQSOs shall also be made to Outside Director Options.
If any recapitalization, reorganization, reclassification, consolidation, merger
of CAH or the Company or any sale of all or substantially all of CAH's or the
Company's assets to another person or entity or other transaction which is
effected in such a way that holders of Shares are entitled to receive (either
directly or upon subsequent liquidation) stock, securities, or assets with
respect to or in exchange for Shares (each an "Organic Change") shall occur, in
lieu of the Shares issuable upon exercise of a Stock Option or Outside Director
Option or pursuant to any other award under the Plan, the Stock Option or
Outside Director Option shall thereafter be exercisable for and other awards
shall be issuable in such shares of stock, securities or assets (including cash)
as may be issued or payable with respect to or in exchange for the number of
Shares immediately theretofore acquirable pursuant to such award had such
Organic Change not taken place (whether or not such Stock Option or Outside
Director Option is then exercisable or other awards are then vested) after
giving effect to any adjustments otherwise required or permitted under this
Plan.
SECTION 5 | STOCK OPTIONS
References to Stock Options in this Section 5 shall not apply to Outside
Director Options. Stock Options may be granted alone or in addition to other
awards granted under the Plan. Any Stock Options granted under the Plan shall be
in such form as the Committee may from time to time approve and the provisions
of Stock Option awards need not be the
3
<PAGE> 4
same with respect to each optionee. Stock Options granted under the Plan may be
either ISOs or NQSOs. The Committee may grant to any optionee ISOs, NQSOs or
both types of Stock Options.
Anything in the Plan to the contrary notwithstanding, without the consent of the
optionee(s) affected, no provision of this Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code or to disqualify any ISO under such Section 422.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan as the Committee deems appropriate. Each
Stock Option grant shall be evidenced by an agreement executed on behalf of the
Company by an officer designated by the Committee and accepted by the optionee.
Such agreement shall describe the Stock Options and state that such Stock
Options are subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, not inconsistent with the Plan, as the
Committee may approve.
(a) Exercise Price. The exercise price per Share issuable upon exercise of a
Stock Option shall be no less than the fair market value per share on the date
the Stock Option is granted; provided, that if the optionee, at the time an ISO
is granted, owns stock possessing more than ten(10)% of the total combined
voting power of all classes of stock of CAH or any subsidiary, the exercise
price shall be at least 110% of the fair market value of the Shares subject to
the ISO on the date of grant. Fair market value on the date of grant shall be
determined by the Committee in good faith.
(b) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten years after the date such
Stock Option is granted.
(c) Exercise of Stock Options. Stock Options shall become exercisable at such
time or times and subject to such terms and conditions (including, without
limitation, installment or cliff exercise provisions) as shall be determined by
the Committee. The Committee shall have the authority, in its discretion, to
accelerate the time at which a Stock Option shall be exercisable whenever it may
determine that such action is appropriate by reason of changes in applicable tax
or other law or other changes in circumstances occurring after the award of such
Stock Options.
(d) Method of Exercise. Stock Options may be exercised in whole or in part by
giving written notice of exercise to the Company specifying the number of Shares
to be purchased. Payment in full of the exercise price shall be paid in cash, or
such other instrument as may be permitted in accordance with rules or procedures
adopted by the Committee. If approved by the Committee, payment in full or in
part may also be made: (i) by delivering Shares already owned by the optionee
having a total fair market value on the
4
<PAGE> 5
date of such delivery equal to the option exercise price; (ii) by the delivery
of cash on the extension of credit by a broker-dealer to whom the optionee has
submitted a notice of exercise or an irrevocable election to effect such
extension of credit; or (iii) by any combination of the foregoing. No Shares
shall be transferred until full payment therefor has been made.
(e) Transferability of Stock Options. Except as otherwise provided hereunder,
Stock Options shall be transferable by the optionee only with prior approval of
the Committee and only in compliance with the restrictions imposed under Section
16(b) of the Exchange Act and Section 422 of the Code, if applicable. Any
attempted transfer without Committee approval shall be null and void. Unless
Committee approval of the transfer shall have been obtained, all Stock Options
shall be exercisable during the optionee's lifetime only by the optionee or the
optionee's legal representative. Without limiting the generality of the
foregoing, the Committee may, in the manner established by the Committee,
provide for the irrevocable transfer, without payment of consideration, of any
Stock Option other than any ISO by an optionee to a member of the optionee's
family or to a trust or partnership whose beneficiaries are members of the
optionee's family. In such case, the Stock Option shall be exercisable only by
such transferee. For purposes of this provision, an optionee's "family" shall
include the optionee's spouse, children, grandchildren, nieces and nephews.
(f) Termination by Death. If an optionee's employment by or service to the
Company terminates by reason of death, then, unless otherwise determined by the
Committee within five days of such death, each Stock Option held by such
optionee shall thereafter be exercisable in full and any unvested portion
thereof shall immediately vest. Each Stock Option held by such optionee may
thereafter be exercised by the legal representative of the estate or by the
legatee of the optionee under the will of the optionee, for a period of one year
(or such other period as the Committee may specify at or after grant or death)
from the date of death or until the expiration of the stated term of such Stock
Option, whichever period is shorter.
(g) Termination by Reason of Retirement. If an optionee's employment by or
service to the Company terminates by reason of retirement, then, unless
otherwise determined by the Committee within sixty days of such retirement each
Stock Option held by such optionee may thereafter be exercised by the optionee
for a period of ninety days (or such other period as the Committee may specify
at or after grant or retirement) from the date of such termination of employment
or service, or until the expiration of the stated term of such Stock Option,
whichever period is shorter; provided, however, that, if the optionee dies
within such ninety day period (or such other period), any unexercised Stock
Option held by such optionee shall thereafter be exercisable, in full, for a
period of one year (or such other period as the Committee may specify at or
after grant or death) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is shorter. In the event of
termination of employment by reason of retirement, if an ISO is exercised after
the expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such ISO shall thereafter be treated as an NQSO. For purposes of the
Plan, unless otherwise determined by the Committee within the parameters set
forth
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below, retirement shall mean voluntary termination of employment by a
participant from the Company after attaining age fifty-five(55) and having (a)
at least ten (10) years of service with the Company including service with a
subsidiary of the Company prior to the time that such subsidiary became a
subsidiary of the Company, and (b) at least five years of continuous service
with the Company excluding service with a subsidiary of the Company prior to the
time that such subsidiary became a subsidiary of the Company. The Committee
discretion described above shall in no event result in a definition of
retirement that is more beneficial to the participant than voluntary termination
of employment from the Company after attaining age fifty-five (55) and having at
least three (3) years of service with the Company.
(h) Other Termination of Employment. If an optionee's employment by or service
to the Company terminates for any reason other than death or retirement, any
Stock Option held by such optionee which has not vested on such date of
termination will automatically terminate on the date of such termination. Unless
otherwise determined by the Committee at or after grant or termination, the
optionee will have ninety(90) days (or such other period as the Committee may
specify at or after grant or termination) from the date of termination to
exercise any and all Stock Options that are then exercisable on the date of
termination; provided, however, that if the termination was for Cause, any and
all Stock Options held by that optionee may be immediately canceled by the
Committee. For purposes of the Plan, "Cause" means on account of any act of
fraud or intentional misrepresentation or embezzlement, misappropriation or
conversion of assets of the Company or any subsidiary, or the intentional and
repeated violation of the written policies or procedures of the Company.
(i) Effect of Termination of Optionee on Transferee. Except as otherwise
permitted by the Committee in its absolute discretion, no Stock Option held by a
transferee of an optionee pursuant to the fourth sentence of Section 5(e) shall
remain exercisable for any period of time longer than would otherwise be
permitted under Sections 5(f), 5(g) or 5(h) without specification of other
periods by the Committee as provided in those Sections.
(j) ISO Limitations. To the extent required for "incentive stock option" status
under Section 422 of the Code, the aggregate fair market value (determined as of
the time of grant) of the Shares with respect to which ISOs are exercisable for
the first time by the optionee during any calendar year under the Plan and any
other stock option plan of the Company and its affiliates, shall not exceed
$100,000.
SECTION 6 | RESTRICTED SHARES
Restricted Shares may be granted alone or in addition to other awards granted
under the Plan. Any Restricted Shares granted under the Plan shall be subject to
the following restrictions and conditions, and shall contain such additional
terms and conditions not inconsistent with the terms of the Plan as the
Committee deems appropriate. The provisions of Restricted Share awards need not
be the same with respect to each recipient.
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(a) Price. The purchase price for Restricted Shares shall be any price set by
the Committee and may be zero. Payment in full of the purchase price, if any,
shall be made in cash, or such other instrument as may be permitted in
accordance with rules or procedures adopted by the Committee. If approved by the
Committee, payment in full or part may also be made: (i) by delivering Shares
already owned by the grantee having a total fair market value on the date of
such delivery equal to the Restricted Share price; (ii) by the delivery of cash
on the extension of credit by a broker-dealer or an irrevocable election to
effect such extension of credit; or (iii) by any combination of the foregoing.
(b) Restricted Share Award Agreement. Each Restricted Share grant shall be
evidenced by an agreement executed on behalf of the Company by an officer
designated by the Committee. Such Restricted Share Award Agreement shall
describe the Restricted Shares and state that such Restricted Shares are subject
to all the terms and provisions of the Plan and shall contain such other terms
and provisions, consistent with the Plan, as the Committee may approve. At the
time the Restricted Shares are awarded, the Committee may determine that such
Shares shall, after vesting, be further restricted as to transferability or be
subject to repurchase by the Company upon occurrence of certain events
determined by the Committee, in its sole discretion, and specified in the
Restricted Share Award Agreement. Awards of Restricted Shares must be accepted
by a grantee thereof within a period of thirty(30) days (or such other period as
the Committee may specify at grant) after the award date by executing the
Restricted Share Award Agreement and paying the price, if any, required under
Section 6(a).The prospective recipient of a Restricted Share award shall not
have any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the applicable
terms and conditions of such award.
(c) Share Restrictions. Subject to the provisions of this Plan and the
applicable Restricted Share Award Agreement, during a period set by the
Committee commencing with the date of such award and ending on such date as
determined by the Committee at grant (the "Restriction Period"), the participant
shall not be permitted to sell, transfer, pledge, assign or otherwise encumber
shares of Restricted Shares awarded under the Plan. In no event shall more than
ten(10)% of the Shares authorized for issuance under this Plan (as adjusted as
provided in Section 4) be granted in the form of Restricted Shares having a
restriction period of less than three(3) years. The Committee shall have the
authority, in its absolute discretion, to accelerate the time at which any or
all of the restrictions shall lapse with respect to any Restricted Shares or to
remove any or all restrictions after the grant of such Restricted Shares,
provided, however, that such discretion shall be exercised subject to the
limitations set forth in the preceding sentence, excluding discretion exercised
in connection with a Grantee's termination of employment from the Company.
Unless otherwise determined by the Committee at or after grant or termination,
if a participant's employment by or service to the Company terminates during the
Restriction Period, all Restricted Shares held by such participant still subject
to restriction shall be forfeited by the participant.
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<PAGE> 8
(d) Stock Certificate and Legends. Each participant receiving a Restricted Share
award shall be issued a stock certificate in respect of such Restricted Shares.
Such certificate shall be registered in the name of such participant. The
Committee may require that the stock certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Shares award, the participant shall have
delivered a stock power, endorsed in blank, relating to the Shares covered by
such award.
(e) Shareholder Rights. Except as provided in this Section 6, the recipient
shall have, with respect to the Restricted Shares covered by any award, all of
the rights of a shareholder of the Company, including the right to vote the
Shares, and the right to receive any dividends or other distributions, with
respect to the Shares, but subject, however, to those restrictions placed on
such Shares pursuant to this Plan and as specified by the Committee in the
Restricted Share Award Agreement.
(f) Expiration of Restriction Period. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Shares subject to such Restriction
Period, unrestricted certificates for such shares shall be delivered to the
participant.
SECTION 7 | PERFORMANCE SHARES AND PERFORMANCE SHARE UNITS
Subject to the terms and conditions described herein, Performance Shares and
Performance Share Units may be granted to eligible participants at any time and
from time to time as determined by the Committee.
(a) Price. The purchase price for Performance Shares and Performance Share Units
shall be zero unless otherwise specified by the Committee.
(b) Performance Share Agreement. Subject to the provisions of this Plan, all the
terms and conditions of an award of Performance Shares or Performance Share
Units shall be determined by the Committee in its discretion. Each Performance
Share and Performance Share Unit shall be evidenced by an agreement executed by
the recipient of the Performance Share or Performance Share Unit and on behalf
of the Company by an officer designated by the Committee. Such Performance Share
or Performance Share Unit Award Agreement shall describe the Performance Share
or Performance Share Unit and state that such Performance Share or Performance
Share Unit is subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, not inconsistent with the Plan, as the
Committee may approve. Award of Performance Shares and Performance Share Units
must be accepted by a grantee thereof within a period of sixty(60) days (or such
other period as the Committee may specify at grant) after the award date by
executing the Performance Share or Performance Share Unit Award Agreement, and
paying the price, if any, as required under Section 7(a).
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(c) Performance Periods. Any time period (the "Performance Period") relating to
a Performance Share or Performance Share Unit award shall be at least one year
in length. No more than two Performance Periods may begin in any one fiscal year
of the Company.
(d) Performance Goals. Performance Shares and Performance Share
Units shall be earned based upon the financial performance of the Company or an
operating group of the Company during a Performance Period. As to each
Performance Period, within such time as established by Section 162(m) of the
Code, the Committee will establish in writing targets for one of the following
performance measures of the Company (and/or an operating group of the Company,
if applicable) over the Performance Period ("Performance Goals"): (i) earnings,
(ii) return on capital, or (iii) any Performance Goal approved by the
shareholders of the Company in accordance with Section 162(m) of the Code. The
Performance Goals, depending on the extent to which they are satisfied, will
determine the number of Performance Shares or Performance Share Units, if any,
that will be earned by each participant. Attainment of the Performance Goals
will be calculated from the consolidated financial statements of the Company but
shall exclude (i) the effects of changes in federal income tax rates, (ii) the
effects of unusual, non-recurring and extraordinary items as defined by
Generally Accepted Accounting Principles ("GAAP"), and (iii) the cumulative
effect of changes in accounting principles in accordance with GAAP. The
Performance Goals may vary for different Performance Periods and need not be the
same for each participant receiving an award for a Performance Period. The
Committee may, in its absolute discretion, subject to the limitations of Section
11, vary the terms and conditions of any Performance Share or Performance Share
Unit award, including, without limitation, the Performance Period and
Performance Goals, without shareholder approval, as applied to any recipient who
is not a "covered employee" with respect to the Company as defined in Section
162(m) of the Code. In the event applicable tax or securities laws change to
permit the Committee discretion to alter the governing performance measures as
they pertain to covered employees without obtaining shareholder approval of such
changes, the Committee shall have sole discretion to make such changes without
obtaining shareholder approval.
(e) Earning of Performance Shares. Performance Shares shall be issued to each
recipient thereof on the later of such time as the Performance Goals are
established or the first day of the applicable Performance Period. The number of
Performance Shares awarded at such time shall be calculated based upon the
assumption that the Performance Goals for the applicable Performance Period will
be satisfied to the fullest extent. The Company, or its designated agent, shall
hold all Performance Shares issued to recipients prior to completion of the
Performance Period. Participants shall be entitled to all dividends and other
distributions earned in respect of such Performance Shares and shall be entitled
to vote such Performance Shares during the period from the initial award date to
the final adjustment of the Performance Shares. After the applicable Performance
Period shall have ended, the Committee shall certify in writing the extent to
which the established Performance Goals have been achieved. Subsequently, the
number of Performance Shares, if any, earned by the recipient over the
Performance Period shall be determined as a function of the extent to which the
Performance Goals for such Performance Period were achieved. If the Performance
Goals are not satisfied to the fullest extent, a recipient may
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<PAGE> 10
earn less than the number of Performance Shares originally awarded, or no
Performance Shares at all. In addition, whether or not the Performance Goals are
satisfied to the fullest extent, the Committee may exercise negative discretion
to reduce the number of Performance Shares or Performance Share Units to be
issued if, in the Committee's sole judgment, such negative discretion is
appropriate in order to act in the best interest of the Company and its
shareholders. The factors to be taken into account by the Committee when
exercising negative discretion include, but are not limited to, the achievement
of measurable individual performance objectives established by the Committee and
communicated to the participant no later than the ninetieth day of the
Performance Period, and competitive pay practices. Performance Shares shall be
paid in the form of Shares. Unrestricted certificates representing such number
of Shares as equals the number of Performance Shares earned under the award
shall be delivered to the participant as soon as practicable after the end of
the applicable Performance Period.
(f) Earning of Performance Share Units. An account documenting Performance Share
Units awarded shall be established for each recipient thereof on the later of
such time as the Performance Goals are established or the first day of the
applicable Performance Period. The number of Performance Share Units credited to
a recipient's account at such time shall be calculated based upon the assumption
that the Performance Goals for the applicable Performance Period will be
satisfied to the fullest extent. After the applicable Performance Period shall
have ended, the Committee shall certify in writing the extent to which the
established Performance Goals have been achieved. Subsequently, the number of
Performance Share Units, if any, earned by the recipient over the Performance
Period shall be determined as a function of the extent to which the Performance
Goals for such Performance Period were achieved, adjusted, if applicable, in
accordance with the negative discretion of the Committee. A recipient may earn
less than the number of Performance Share Units originally awarded, or no
Performance Share Units at all. Performance Share Units shall be paid in the
form of Company check, the amount of which shall be calculated by multiplying
the fair market value per Share on the last day of the Performance Period by the
number of Performance Share Units, as adjusted pursuant to the last paragraph of
Section 4.
(g) Termination of Employment or Service Due to Death or at the Request of the
Company Without Cause. In the event the employment by or service of a
participant is terminated by reason of death, or by the Company without Cause
during a Performance Period, unless determined otherwise by the Committee, the
participant or his legal representative, as applicable, shall receive a prorated
payout with respect to the Performance Shares and Performance Share Units
relating to such Performance Period. The prorated payout shall be based upon the
length of time that the participant held the Performance Shares or Performance
Share Units during the Performance Period and the progress toward achievement of
the established Performance Goals. Distribution of earned Performance Shares and
Performance Share Units, if any, shall be made at the same time payments are
made to participants who did not terminate employment during the applicable
Performance Period.
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(h) Termination of Employment or Service for Other Reasons. In the event that a
participant's employment or service terminates for any reason other than those
reasons set forth in paragraph (g) of this Section 7, all Performance Shares and
Performance Share Units shall be forfeited by the participant to the Company,
except as otherwise determined by the Committee.
(i) Nontransferability. Except as otherwise provided herein, no Performance
Share or Performance Share Unit may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated. Further, a participant's rights under the
Plan shall be exercisable during the participant's lifetime only by the
participant or the participant's legal representative.
SECTION 8 | INCENTIVE COMPENSATION RESTRICTED SHARES
Each employee participating in this Plan who also participates in the Company's
Management Incentive Plan (the "Incentive Compensation Plan") may be eligible,
in the Committee's sole discretion, to elect to receive all or a portion of the
annual incentive compensation ("Incentive Compensation") payable to the employee
under the Incentive Compensation Plan in the form of Incentive Compensation
Restricted Shares. To elect the payout of all or a portion of annual Incentive
Compensation in Incentive Compensation Restricted Shares, an employee must
complete and submit to the Committee an Incentive Compensation Restricted Shares
Election Form after the Committee has determined the factor set forth in Section
8(c)(B) and the vesting schedule of the Incentive Compensation Restricted
Shares, but in any event, prior to the date established by the Committee for
election of such deferral. The Incentive Compensation Restricted Shares shall be
evidenced by an Incentive Compensation Restricted Shares Agreement executed on
behalf of the Company by an officer designated by the Committee and accepted by
the employee. Such agreement shall describe the Incentive Compensation
Restricted Shares and state that such Incentive Compensation Restricted Shares
are subject to all terms and provisions, not inconsistent with the Plan, as the
Committee may approve. Terms and conditions of Incentive Compensation Restricted
Shares shall include the following:
(a) Deferral Election. Within such limits as the Committee may establish, any
portion of annual Incentive Compensation can be elected for payout in Incentive
Compensation Restricted Shares, in a dollar amount or as a percentage of total
Incentive Compensation, or as a percentage of total Incentive Compensation with
a stated maximum dollar amount.
(b) Issuance of Incentive Compensation Restricted Shares. Incentive Compensation
Restricted Shares will be issued on the same date that cash payouts are made
under the Incentive Compensation Plan, based on the fair market value of the
Shares on the date of the issuance.
(c) Number of Shares. The number of Incentive Compensation Restricted Shares
granted to an employee will equal the product of (A) that number of Shares as
have an aggregate fair market value equal to the dollar amount of the annual
Incentive Compensation to be received in the form of Incentive Compensation
Restricted Shares multiplied by (B) a
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factor greater than or equal to 1.00, but less than or equal to 1.30, as
determined by the Committee prior to the date established by the Committee for
the deferral election to be made.
(d) Termination of Employment Due to Death, Disability or Retirement or at the
Request of the Company Without Cause. If the employee's employment is terminated
by reason of death, disability or retirement or by the Company without Cause,
all of the restrictions applicable to unvested Incentive Compensation Restricted
Shares shall be waived and all Incentive Compensation Restricted Shares shall be
immediately vested. If the employee's employment is terminated for any other
reason, the Incentive Compensation Restricted Shares held by that employee will
be forfeited as of the date of such termination; provided, however, that the
Committee may, in its sole discretion, provide that such Incentive Compensation
Restricted Shares will not so terminate. In such event, such Incentive
Compensation Restricted Shares will vest in accordance with the vesting schedule
set forth in the Incentive Compensation Restricted Shares Agreement or on such
accelerated basis as the Committee may determine at or after grant or
termination of employment.
(e) Application of Section 6. Except to the extent inconsistent with this
Section 8, the provisions of Section 6 and all other provisions of the Plan
pertaining to Restricted Shares shall be applicable to Incentive Compensation
Restricted Shares.
SECTION 9 | OUTSIDE DIRECTOR OPTIONS
(a) Administration. Outside Directors shall be eligible to participate in the
Plan only as expressly set forth in this Section 9. The Committee shall have no
power to determine which Outside Directors will receive Outside Director
Options, the amount of such Outside Director Options, or the terms of such
Outside Director Options to the extent provided in subsections (b) through (i)
below. None of the provisions of Section 5 applicable to Stock Options shall be
applicable to Outside Director Options.
(b) Eligibility and Grant. Outside Director Options shall be NQSOs. All Outside
Director Options shall be evidenced by a written agreement, which shall be dated
as of the date on which an Outside Director Option is granted, signed by an
officer of the Company authorized by the Committee, and signed by the Outside
Director. Such agreement shall describe the Outside Director Options and state
that such Outside Director Options are subject to all terms and provisions of
the Plan.
(c) Vesting. All Outside Director Options shall be fully vested on the date of
grant.
(d) Number of Shares. Each individual first elected or appointed to serve as a
director of the Company at or after adjournment of the Company's annual meeting
of shareholders (an "Annual Meeting") in 1997 who is an Outside Director shall,
upon such election or appointment, automatically be granted options for that
number of Shares having a fair market value of $150,000 (each an "Initial
Grant"). In addition, commencing immediately after the adjournment of the Annual
Meeting in 1997 and continuing on an annual basis,
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immediately following the adjournment of each succeeding Annual Meeting
thereafter during the term of this Plan each Outside Director whose term did not
expire at that Annual Meeting and who has then served as a director of the
Company for a consecutive period of time which includes each of the last three
Annual Meetings (i.e., including the Annual Meeting then just adjourned) shall
automatically be granted additional Outside Director Options for that number of
Shares having a fair market value of $100,000 (each an "Annual Grant").
Beginning on July 1, 2000, and on every third July 1 thereafter, the dollar
value of the Initial Grants and Annual Grants shall automatically be increased
under this Plan by a percentage equal to that percentage by which the fair
market value per Share has increased in the immediately preceding three-year
period, not to exceed a forty-five (45)% aggregate increase over any such
three-year period. For purposes of this Section 9, fair market value means the
last sale price of the Shares on the applicable date (or, if no sale of Shares
occurs on such date, on the next preceding date on which a sale occurred) as
reported on the New York Stock Exchange Composite Tape.
(e) Exercise Price. The exercise price per Share purchasable under an Outside
Director Option shall be equal to the fair market value on the day the Outside
Director Option is granted.
(f) Maximum Term. Each Outside Director Option shall be exercisable for ten(10)
years from the date of grant; provided, however, that in the event an Outside
Director's service to the Company is terminated for Cause, each Outside Director
Option held by that Outside Director on the date of termination shall be
canceled effective as of such termination date.
(g) Transferability of Outside Director Options. Outside Director Options shall
be transferable to the maximum extent permissible under Rule 16b-3, as amended
from time to time.
(h) Method of Exercise. Outside Director Options may be exercised in whole or in
part by giving written notice of exercise to the Company specifying the number
of Shares to be purchased. No Shares shall be transferred until full payment
therefor has been made. Payment for exercise of an Outside Director Option may
be made (i) in cash, (ii) by delivery of Shares already owned by the Outside
Director, (iii) by delivery of cash on the extension of credit by a
broker-dealer to whom the Outside Director has submitted a notice of exercise or
an irrevocable election to effect such extension of credit, or (iv) by any
combination of the foregoing.
(i) Termination of Option. Except as otherwise provided herein, if an Outside
Director ceases to be a member of the Board for any reason, then all Outside
Director Options or any unexercised portion of such Outside Director Options
which otherwise are exerciseable shall terminate unless such Outside Director
Options are exercised within six(6) months after the date such Outside Director
ceases to be a member of the Board (but in no event after expiration of the
original term of such Outside Director Options);
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provided that if such Outside Director ceases to be a member of the Board by
reason of such Outside Director's death, the six-month period shall instead be a
one-year period.
(j) Applicability of Other Provisions to Outside Director Options. Except for
Section 5 and except to the extent inconsistent with the provisions of this
Section 9, all other terms applicable to Stock Options set forth in other
sections of this Plan are applicable to Outside Director Options.
SECTION 10 | CHANGE OF CONTROL PROVISIONS
(a) Impact of Event. In the event of a "Change of Control" as defined in Section
10(b), the following acceleration and valuation provisions shall apply:
(i) On the date that such Change of Control is determined to have occurred, any
or all Stock Options awarded under this Plan not previously exercisable and
vested shall become fully exercisable and vested.
(ii) The restrictions applicable to any or all Restricted Shares, Incentive
Compensation Restricted Shares, Performance Shares and Performance Share Units
shall lapse and such shares and awards shall be fully vested.
(b) Definition of "Change of Control". For purposes of Section 10(a), a "Change
of Control" shall mean:
(i) the acquisition by any individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of twenty-five(25)% or more of either (x) the then outstanding common shares of
CAH (the "outstanding CAH Common Shares") or (y) the combined voting power of
the then outstanding voting securities of CAH entitled to vote generally in the
election of directors (the "Outstanding CAH Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (A) any acquisition directly from CAH
or any corporation controlled by CAH, (B) any acquisition by CAH or any
corporation controlled by CAH, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by CAH or any corporation controlled
by CAH or (D) any acquisition by any corporation pursuant to a transaction which
complies with clauses (x), (y) and (z) of subsection (iii) of this Section
10(b); or
(ii) individuals who, as of the Effective Date of this Plan,
constitute the Board of CAH (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of CAH; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election,
or nomination for election by CAH's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors
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or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) approval by the shareholders of CAH of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, (x) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding CAH Common Shares
and Outstanding CAH Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty(50)% (or
such lower percentage as may be determined by the Board of Directors of CAH
prior to such Business Combination) of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns CAH or all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business Combination of
the Outstanding CAH Common Shares and Outstanding CAH Voting Securities, as the
case may be, (y) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, twenty-five (25)% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination
(including any ownership that existed in the Company or the company being
acquired, if any) and (z) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(iv) approval by the shareholders of CAH of a complete liquidation or
dissolution of CAH.
SECTION 11 | AMENDMENTS AND TERMINATION
The Board may amend, alter or discontinue the Plan; provided, however, no
amendment, alteration or discontinuation shall be made which would impair the
rights of an optionee, participant or transferee pursuant to Section 5(e) under
any award theretofore granted, without the optionee's, participant's or
transferee's consent, or which, without the approval of CAH's shareholders,
would:
(a) except as expressly provided in the Plan, increase the total number of
Shares reserved for purposes of the Plan;
(b) change the class of individuals eligible to participate in the Plan;
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(c) extend the maximum option period of Stock Options or Outside Director
Options; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any award theretofore granted (except an
Outside Director Option), prospectively or retroactively; provided no such
amendment shall impair the rights of any holder without the holder's consent;
provided, further, no Stock Option may be amended so as to decrease the exercise
price of such Stock Option to reflect a decrease in the fair market value of the
underlying stock.
The provisions regarding Outside Director Options pursuant to Section 9 above
shall not in any case be amended more often than once in any six-month period
other than to comply with changes in the Code or ERISA, or the rules thereunder.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
SECTION 12 | UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments or deliveries of Shares not yet made
by the Company to a participant, optionee or transferee, nothing contained
herein shall give any such participant, optionee or transferee any rights that
are greater than those of a general creditor of the Company. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Shares or payments hereunder consistent with
the foregoing.
SECTION 13 | GENERAL PROVISIONS
(a) Share Transfer and Distribution. The Committee may require each person
purchasing Shares pursuant to a Stock Option, Outside Director Option,
Performance Share, Restricted Share or Incentive Compensation Restricted Share
award under the Plan to represent to and agree with the Company in writing that
the optionee or participant is acquiring the Shares without a view to the
distribution thereof. Any certificates for such Shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All Shares or other securities delivered under the Plan shall be subject to such
stop-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Shares are then listed
and any applicable federal or state securities law, and the Committee may cause
a legend or legends to be put on any certificates evidencing such Shares to make
appropriate reference to such restrictions.
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The Company shall not be required to deliver any Shares or other securities
under the Plan prior to such registration or other qualification of such Shares
or other securities under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
(b) Additional Arrangements. Nothing contained in this Plan shall prevent the
Company from adopting other or additional compensation arrangements for its
employees, consultants or Outside Directors.
(c) No Right to Award or Employment. No person shall have any claim or right to
be granted an award under this Plan and the grant of an award shall not confer
upon any participant any right to be retained as an employee or director of CAH
or any subsidiary, nor shall it interfere in any way with the right of CAH or
any subsidiary to terminate the employment or service as a director of any of
the Plan's participants at any time.
(d) Tax Withholding. The Company shall have the right to require the grantee of
Restricted Shares, Incentive Compensation Restricted Shares, Performance Shares
or Performance Share Units or other person receiving such Shares to pay the
Company the amount of any taxes which the Company is required to withhold with
respect to such Shares or, in lieu thereof, to retain, or sell without notice, a
sufficient number of Shares held by it to cover the amount required to be
withheld. The Company shall have the right to deduct from all dividends paid
with respect to Restricted Shares, Incentive Compensation Restricted Shares, and
Performance Shares the amount of any taxes which the Company is required to
withhold with respect to such dividend payments.
The Company shall also have the right to require an optionee to pay to the
Company the amount of any taxes which the Company is required to withhold with
respect to the receipt by the optionee of Shares pursuant to the exercise of a
Stock Option, or, in lieu thereof, to retain, or sell without notice, a number
of Shares sufficient to cover the amount required to be withheld.
(e) Beneficiaries. The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
(f) Laws Governing. The Plan and all awards made and action taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Ohio, except to the extent superseded by federal law.
(g) Government Regulation. Notwithstanding any provisions of the Plan or any
agreement made pursuant to the Plan, the Company's obligations under the Plan
and such agreement shall be subject to all applicable laws, rules and
regulations and to such approvals as may be required by any governmental or
regulatory agencies.
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SECTION 14 | EFFECTIVE DATE OF PLAN
The Plan shall be effective on the date (the "Effective Date") it is approved by
the shareholders of CAH. No grants shall be made under this Plan prior to the
Effective Date.
SECTION 15 | TERM OF PLAN
No award shall be granted pursuant to the Plan on or after the tenth anniversary
of the Effective Date of the Plan, but awards granted prior to such tenth
anniversary may extend beyond that date.
SECTION 16 | INDEMNIFICATION
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award granted
under the Plan. Each person who is or shall have been a member of the Committee
or of the Board shall be indemnified and held harmless by the Company against
and from any loss, cost, liability or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under or in connection
with this Plan or any award granted under this Plan and against and from any and
all amounts paid by him in settlement thereof, with the Company's approval, or
paid by him, except a judgment based upon a finding of bad faith, provided he
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person may be entitled under the Company's
Articles of Incorporation or Code of Regulations, contained in any
indemnification agreements, as a matter of law, or otherwise, or any power that
the Company may have to indemnify him or hold him harmless.
SECTION 17 | SAVINGS CLAUSE
In case any one or more of the provisions of this Plan shall be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provision shall be
deemed null and void; however, to the extent permissible by law, any provision
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Plan to be construed so as to foster the
intent of this Plan. This Plan is intended to comply in all respects with
applicable law and regulation, including Code Section 422 and, with respect to
Reporting Persons, Rule 16b-3. In case any one or more of the provisions of this
Plan shall be held to violate or be unenforceable in any respect under Code
Section 422 or Rule 16b-3, then to the extent permissible by law, any provision
which could be deemed to violate or be unenforceable under Code Section 422 or
Rule 16b-3 shall first be construed, interpreted, or revised
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retroactively to permit the Plan to be in compliance with Code Section 422 and
Rule 16b-3. Notwithstanding anything in this Plan to the contrary, the
Committee, in its sole and absolute discretion, may bifurcate this Plan so as to
restrict, limit or condition the use of any provision of this Plan to
participants who are Reporting Persons or covered employees as defined under
Code Section 162(m) without so restricting, limiting or conditioning this Plan
with respect to other participants.
SECTION 18 | AWARDS TO PARTICIPANTS OUTSIDE OF UNITED STATES
The Committee may modify the terms of any award under the Plan granted to a
participant who, at the time of grant or during the term of the award, is
resident or employed outside of the United States in any manner deemed by the
Committee to be necessary or appropriate in order to accommodate differences in
local law, regulation, tax policy or custom, or so that the value and other
benefits of the award to the participant, as affected by foreign tax laws and
other restrictions applicable as a result of the participant's residence or
employment abroad, will be comparable to the value of such an award to a
participant who is resident or employed in the United States. Moreover, the
Committee may approve such supplements to, or amendments, restatements or
alternative versions of, this Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of this Plan as in effect
for any other purpose, provided that no such supplements, amendments,
restatements or alternative versions shall include any provisions that are
inconsistent with the terms of this Plan, as then in effect, unless this Plan
could have been amended to eliminate such inconsistency without further approval
of the shareholders of CAH.
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EXHIBIT 5
February 19, 1999
Cardinal Health, Inc.
5555 Glendon Court
Dublin, OH 43016
Gentlemen:
I have acted as counsel to Cardinal Health, Inc., an Ohio
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement") filed under the Securities
Act of 1933, as amended (the "Act") relating to the issuance of up to 3,743,270
Common Shares, without par value (the "Common Shares"), of the Company pursuant
to awards under the Cardinal Health, Inc. Equity Incentive Plan (the "Plan").
In connection with the foregoing, I have examined: (a) the
Amended and Restated Articles of Incorporation, as amended, and Restated Code of
Regulations, as amended, of the Company, (b) the Plan, and (c) such records of
the corporate proceedings of the Company and such other documents as I deemed
necessary to render this opinion.
Based on such examination, I am of the opinion that the Common
Shares available for issuance under the Plan, when issued, delivered and paid
for in accordance with the terms and conditions of the Plan, will be legally
issued, fully paid and nonassessable.
I hereby consent to the filing of this Opinion as Exhibit 5 to
the Registration Statement and the reference to me in Item 5 of Part II of the
Registration Statement. In giving such consent, I do not thereby admit that I am
in the category of person whose consent is required under Section 7 of the Act
or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Paul S. Williams
Paul S. Williams,
Vice President
and Assistant General Counsel
Cardinal Health, Inc.
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. on Form S-8 of our report dated August 12, 1998 (which
report expresses an unqualified opinion that such financial statements are in
conformity with generally accepted accounting principles applicable after
consolidated financial statements are issued for a period which includes the
date of consummation of the business combination of Cardinal Health, Inc. and
R.P. Scherer Corporation), appearing in Cardinal Health, Inc.'s Current Report
on Form 8-K/A filed September 28, 1998.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbus, Ohio
February 19, 1999
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Cardinal Health, Inc. (the "Company") on Form S-8 of our report, with respect to
the consolidated financial statements of Pyxis Corporation (not presented) dated
August 2, 1996, appearing in the Company's Current Report on Form 8-K/A dated
September 28, 1998.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
February 19, 1999
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Cardinal Health, Inc. of our report dated January 30,
1997 related to the financial statements of Owen Healthcare, Inc. which appears
on page 5 of Cardinal Health, Inc.'s Current Report on Form 8-K/A dated
September 28, 1998.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
February 19, 1999
<PAGE> 1
EXHIBIT 23(d)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Registration Statement of Cardinal Health, Inc. on Form S-8, of our
report with respect to R.P. Scherer Corporation dated April 27, 1998 (except
with respect to the matter discussed in Note 16, as to which the date is May
17,1998) included in the Current Report on Form 8-K/A (Amendment No. 1, dated
September 28, 1998) of Cardinal Health, Inc. and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
Detroit, Michigan
February 18, 1999.
